Court Rejects Stay on FCC’s Reinstatement of UHF Discount – Does it Mean TV Ownership Consolidation is in the Clear?

Yesterday, in a very short one page decision, the US Court of Appeals rejected the requests filed by public interest groups to stay the effect of the FCC’s decision to reinstate the UHF discount (see our article here about some of the issues involved in this stay request, and our article here about the reinstatement of the UHF discount by the current FCC). For the foreseeable future, this decision will free many broadcast television groups to acquire more television stations as UHF stations (which most TV stations now are) count for only half their audience reach in assessing compliance with the 39% limit on the national audience share that any TV owner can have. While, contrary to some press reports, this does not signal the Court’s final approval of the FCC’s decision to reinstate the discount, it does suggest the direction which the Court is likely to take in its assessment of this Commission decision.

In rejecting the stay, the Court merely says that the public interest groups did not meet the high standards necessary for a stay. As we wrote in our article the week before last, and have written before in other contexts where stays of administrative decisions have been sought (see e.g. our article here), there is a high burden for any petitioner to meet before a stay is ordered. Basically, the court looks at questions including whether the petitioner has shown that it is likely to ultimately prevail in the final decision in the case, whether there are irreparable damages that will occur from not issuing the stay and how the equities of the situation weigh in deciding whether a stay should be imposed. Presumably, the Court here either decided that the public interest groups had not shown that they were likely to prevail in the ultimate appeal of the FCC’s decision, or that they had not shown that there would be irreparable harm from not imposing the stay.

This decision does not end the case. The public interest groups can continue to pursue their appeal though full briefing and oral argument and a full court decision. However, the rejection of the stay certainly increases the odds that the FCC will ultimately prevail in its defense of the reinstatement of the UHF discount. This is not a case where new facts or arguments are likely to be raised in the full briefs in the case. The record supporting the decision is already in place. No new evidence will be adduced by the Court before rendering its final decision. Instead, the same basic principles that supported the arguments for the stay will be the same principle arguments that support the underlying appeal. It would seem that if the Court decided that these arguments were not clear and convincing winners in connection with the stay, it would be likely that, given the deference that the Court must give to the opinion of the expert agency, those arguments are unlikely to be found convincing in connection with the ultimate appeal.

Of course, things change. The judges hearing the appeal may not be the same ones who heard the stay request. The arguments can be presented in another, more compelling way. Or the rejection of the stay could have had nothing to do with the merits of the case, but instead could have been based on the lack of irreparable harm from not imposing a stay – e.g. thinking that any deals that are approved in reliance on the UHF discount could be undone if the Court were to ultimately reject the FCC’s decision. But the decision certainly increases the odds that the reinstatement of the UHF discount will be upheld. Stay tuned for more news on this proceeding.

David Oxenford represents broadcasting and digital media companies in connection with regulatory, transactional and intellectual property issues. He has represented broadcasters and webcasters before the…

David Oxenford represents broadcasting and digital media companies in connection with regulatory, transactional and intellectual property issues. He has represented broadcasters and webcasters before the Federal Communications Commission, the Copyright Royalty Board, courts and other government agencies for over 30 years.

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David is a partner at the law firm of Wilkinson Barker Knauer LLP, practicing out of its Washington, DC office. He has represented broadcasters for over 30 years on a wide array of matters from the negotiation and structuring of station purchase and sale agreements to regulatory matters. His regulatory expertise includes all areas of broadcast law including the FCC’s multiple ownership limitations, the political broadcasting rules, EEO policy, advertising issues, and other programming matters and FCC technical rules.